Ex-ante moral hazard and health insurance: Evidence from China's urban residence basic medical insurance scheme.

This study examines whether implementing Urban Residents Medical Insurance Scheme decreased an individual's risky lifestyle behavior before illness, termed ex-ante moral hazard. Ex-ante moral hazard is predicted by the classical economic theory suggesting that health insurance coverage reduces an individual's incentive to take preventive efforts to remain healthy. Studies have provided mixed evidence for this prediction. China's 2006 nationwide social experiment of implementing the Urban Residents Basic Medical Insurance Scheme offers an excellent opportunity for examining the effect of the transition from uninsured to insured on an individual's health behaviors. We exploit the longitudinal dimension of a representative survey data for 2007-2010 and employ the instrumental variable technique, thereby addressing the issue of self-selection into voluntary health insurance schemes. The results do not provide evidence for and contrast the prediction of the ex-ante moral hazard. Significant differences exist between insured and uninsured groups with respect to smoking, drinking habits, and being overweight. People with insurance care more about their health than people without insurance do. The main results still hold if we use alternative estimation methods and other robustness tests.

Incorporating future unrelated medical costs in cost-effectiveness analysis in China.

The occurrence of future unrelated medical costs is a direct consequence of life-prolonging interventions, but most pharmacoeconomic guidelines recommend the exclusion of these costs. The Chinese guidelines were updated in 2020, taking an exclusion approach for the future unrelated medical cost. We notice the research surrounding this issue continues in other countries and leads to an inclusion recommendation in some guidelines. Meanwhile, this issue has not been discussed in China, reflecting an urgent need for extensive research on its impact. We reviewed the theoretical and practical studies surrounding the inclusion of future unrelated medical costs, summarised the landscape of guidelines in other jurisdictions. We found that the inclusion would increase the internal and external consistency of economic evaluation and the comparability of results between different jurisdictions. However, more research is needed surrounding this issue. We proposed a future research agenda to inform the update of Chinese guidelines. We recommend research on individual-level healthcare reimbursement data and end-of-life costs from hospital administrative data to generate the age-specific, sex-specific and condition-specific costs. We also recommend establishing a formal process to evaluate the ethical and economic impact of including future unrelated medical costs and adjust the threshold accordingly in the guidelines.